Response to a conservative asking me to explain why it's fair to the top 1% to have to pay 21%

[ehrnst]

of Federal Taxes in a facebook faceoff.

First I told her her information was both wrong and incomplete. Yes, 45% don't pay Federal INCOME taxes, which includes senior citizens on social security, teenagers with part time jobs, people on unemployment, etc. However, 85% of those filing taxes paid some sort of federal tax via payroll tax. Federal Income tax is only one federal tax paid.

Then I asked her if she knew the percentage of all income that the top 1% or even 2% make.

She said that she had no idea.

Then how could anyone know if their paying 21% of all income tax was 'fair or unfair?' - I asked.

I told her how when I was in high school one summer, I made $400 (before taxes) at a local theatre which reported it and was enough to require me to file, but I didn't owe any federal income tax. My mom (single at the time) was a public school teacher and made $14,000. She also filed, and owed federal income tax.

I then asked her to explain to me why it was fair that the top earning 50% of those in my household filing for taxes paid 100% of the total federal income taxes collected.

Silence.


(Edit for typos)

[izquierdista]

1. Too much math

"What do you mean, 'top earning 50%'?"

[krispos42]

3. It was my understanding there would be no math

[ehrnst]

17. My mother and I were the earners filing taxes. She is 50% of the household earners.

and she is the top earner. By the measure used by the conservative asking the question, my mother is the top earning 50% of my houshold.

[izquierdista]

24. It was my understanding there would be no math.

:dunce:

[Matariki]

2. The answer is much more simple

Because they OWN over 40% of the national wealth. They clearly aren't paying enough by half.

[Scuba]

7. +1

[FBaggins]

12. Income and assets aren't the same thing.

Part of the economic problems that we've had over the last few years has clearly been too much debt and too little savings.

Debt can already save you money on taxes (interest deductions)... if you add a tax on money that you save instead of spending (rather than the income on that savings), then you further encourage people to spend their money now rather than saving it.

[Matariki]

18. Correct. But lowering capital gains tax benefited the idle rich.

[FBaggins]

21. Sure... but that's income off of assets... not a tax on assets.

There isn't any way to avoid the upper incomes having a higher proportion of assets than of annual income... because they're the ones who have excess money to save. Obviously those living paycheck to paycheck and spending more than they make will have SOME percentage of overall income, but almost zero savings.

[minavasht]

14. If I am not mistaken

federal taxes are paid on income, not wealth?
I could be wrong.

[DaveJ]

4. Because they are the beneficiaries of taxes

Almost all the tax money is for the benefit of the rich:

- Roads to transport their products and staff who can barely afford anything else but to go to work.
- Police and armies to protect the money they are hoarding.
- Public aid to help people who aren't getting by on the salaries they pay.

In actuality, though, no sort of logic will work on someone like that.

[Scuba]

8. + Another

[NYC_SKP]

5. There's much more to accumulating wealth than "income", so the income tax comparison is misleading.

Stock options, capital gains, dividends, and other "non-income" are taxed differently.

One of the ways the 1% is able to befuddle the rest of us depends upon us all thinking that it's all about income tax.

Well, it's not.

We need to look at all the different ways the privileged few are feathering their nests at our expense and flatten it.

[baldguy]

6. It's simpler than that.

Imagine that the entire population of the US is 10 people, and the entire cumulative annual income is $1.00. We know that A) one guy is going to grab $0.70 of that dollar for himself and that B) the federal govt need at least $0.30 a year at minimum to perform all the functions we require of it. If most of that $0.30 doesn't come from the guy that takes most of the dollar, where will it come from? That's right: EVERYONE ELSE.

[Gormy Cuss]

10. What's the source of that graph?

Or more to the point, the percentages used to construct the pie. I'd love to toss this in to 1% debates but not without a source. Thanks.

[tkmorris]

13. This isn't the source for that chart but...

Very similar charts can be found here http://sociology.ucsc.edu/whorulesamerica/power/wealth.html . I think you'll be satisfied with the citations for these.

[Gormy Cuss]

22. thanks n/t

[baldguy]

15. An article about a survey of Americans preferences when comparing two national income distributions.

The Title: "92% Of Americans Are Socialists They Just Don’t Know It"

http://www.politicususa.com/en/american-socialists

[Gormy Cuss]

23. thanks n/t

[EffieBlack]

9. Nice . . .

[snagglepuss]

11. Wikipedia clearly details the benefits of progressive taxation. Progressive taxation meaning that

tax rate increase as income levels increase.


http://en.wikipedia.org/wiki/Progressive_tax

[LiberalFighter]

16. Ask her how much of her income is not taxed.

Then tell her that those with $200k or more income have on average $64k in itemized deductions. That is on top of any personal exemptions claimed.

You could then follow up by letting her know that it isn't about the 46% that don't have enough income to pay federal income taxes. It is about reducing tax liabilities for the rich and letting those with less income than them pay more of the taxes that the rich should be paying.


A family of 4 that uses the standard deduction and has 4 personal exemptions will have $26,000 of income exempt minimum. $11,400 of that is the standard deduction. The main difference is that those with the ability to itemize do much better.

[badtoworse]

19. The Tax Foundation has substantial data on Federal Income Tax

In 2008, the latest year for which they have data, the top 1% had 20.00% of the Adjusted Gross Income ("AGI") and paid 38.02% of the Federal Income Tax. If you had AGI of more than about $380,000, congratulations - you were in the top 1%. The top 1% also paid the highest average tax rate at 23.27%.

The top 5% had 34.73% of the AGI and paid 58.72% of the Federal Income Tax. You needed an AGI of about $160,000 to be in that group and you paid an average tax rate of 20.70%.

The bottom 50% made 12.75% of the AGI and paid 2.70% of the Federal Income Tax. If you made less than about $33,000, you were in that group and paid an average tax rate of 2.59%.

See link: http://www.taxfoundation.org/news/show/250.html#table3

[subterranean]

20. Here's why: Last year, 20.3% of the nation's total income went to the top 1%.

If you factor in payroll tax, state tax and local tax, the share of total taxes paid by the top 1% was 21.5% - almost equal to their share of total income.

http://www.ctj.org/pdf/taxday2011.pdf

[ehrnst]

25. The numbers that she quoted were Federal Income Tax numbers, not total tax numbers

Which is the basis for the clame 45% don't pay federal income tax, and the wealthy so much more.

[subterranean]

26. Yes, but that ignores the bigger picture.

Which is that when ALL taxes are included, the share of taxes paid by the top 1% is about the same as their share of total income. You could say that the progressive federal income tax balances out the regressive nature of other taxes.

It's also fair to ask more from the very wealthy because they don't have to spend as much of their income on basic needs. Given the choice between paying a 39% marginal tax rate on a million dollars or 25% on $75,000, I know which one I'd pick.